Five Lessons Learned from Nonprofit Partnerships & Mergers

Over the last 20 years, there has been increasing research in the field of nonprofit mergers. How are they unique compared to the corporate sector? What are the elements that contribute to success? What are the trends being seen in the overall sector and sub-sectors?

Recently I conducted a seminar for Cardinal Stritch University Mission Fuel program, titled “Nonprofit Strategic Partnerships: Is Merger Right for You?” Nonprofit strategic partners and mergers are not always the answer.

Lessons Learned from Nonprofit Partnerships & Mergers

Credit: Zak Eden, Cardinal Stritch University

Whenever there are economic and political disruptions, the narrative in the social sector often turns toward partnerships and mergers. Can mergers help organizations better weather tough economic times? Can they expand services and create increased impact for clients? These are important questions for consideration, however there are other strategic factors that will inform whether merger or strategic partnership is right for you.

In the 2016 study called the Chicago Nonprofit Merger Project, 25 nonprofit mergers were analyzed from 2004-2014 to identify how trends have shifted over the last 20 years. The study identified that strategic partnerships and mergers are seen as a competitive strategy to support organizations in increasing growth and services. The study saw organizations using strategic partnerships and mergers as a response to market and policy trends to improve their competitive advantage. In addition, many of the organizations in the Chicago study had previous merger experience. In 85% of the cases, the board chair or board members emerged as chief merger advocates.

In my own experience facilitating nonprofit strategic partnerships and mergers, there are five lessons I have learned that are key success factors.

Lessons Learned from Nonprofit Partnerships & MergersOrganizations have examined the “Why”

Why are we motivated to consider a strategic partnership or merger? What are the drivers? What are the benefits or desired outcomes for partnership? What are the critical issues? How attractive is our organization as a partner? Do we have enough commonality in our missions and our cultures to see a win-win?

I have worked with many organizations that come to me for support in negotiations and they haven’t gone through the exercise of asking “Why”. I always suggest they return to this stage of self-assessment to gain clarity before embarking on the journey of negotiations. La Piana Consulting has a helpful tool to guide you through the steps.

Board-Executive vision is aligned

The exercise of clarifying the “why” should uncover any areas where the board and the executive are not aligned in the vision. This alignment is essential to enter into any negotiations. Ultimately the board has the authority to change the legal structure of the organization, not the executive. Without alignment, precious time and energy will be expended to establish alignment with each partner organization.

Trust is present and growing

Organizations that are able to navigate the negotiations have had positive previous experience with collaborations and partnerships. These organizations believe there is potential for another positive collaboration. An organization may not have complete trust in the potential partner but the members of the negotiations committee are willing to explore options and see great potential in the possibility. In the circumstances with lower levels of initial trust, engaging a 3rd party facilitator can be very valuable. A facilitator can provide the container to help the organizations build the trust necessary to continue partnership discussions.

Organizations have a growth and innovation orientation

Organizations are living and breathing entities comprised of people. Our brains are designed to minimize danger and maximize reward. Change is often interpreted as danger. For organizations to successfully navigate a change as significant as a merger or strategic partnership, it is necessary to have a guiding coalition of changemakers who are comfortable with innovation and change that can be the bridge for those who are less comfortable.

Culture integration is the undercurrent of all success

The assessment and negotiation phases can be lengthy. Once a vote is taken by the boards, everyone involved in the negotiation process takes a big sigh and starts to disengage from the process. Yet, successful mergers are akin to climbing Mount Everest. Getting through negotiations is similar to arriving at base camp. The final phase is more complex and more critical to success. Organizations that invest the same level of intention and focus on the cultural integration process have the greatest long-lasting success.

Is merger right for you?

Have you been considering a strategic partnership or merger? Are you wondering if it is the right path for your organization to increase its mission impact? Let’s chat!